Changing majors: Biden revamps, scales down student debt schemes
President Biden’s Student Loan Plans: A Complex and Evolving Landscape
Exploring President Joe Biden’s student loan plans is like embarking on a semester-long course. Since the Supreme Court struck down a $400 billion student debt transfer, the Biden administration has been tirelessly regrouping and attacking the issue from multiple angles. The sheer number of initiatives can make it challenging even for seasoned loan forgiveness followers to keep up.
The Challenge of Tracking Biden’s Student Loan Plans
“I find it very hard to track what is happening and how they’re doing it,” said Neal McCluskey, director of the Cato Institute’s Center for Educational Freedom. “So I imagine that the average person is unable to follow any of this. I don’t know whether that is intentional or not.”
In August 2022, President Biden unveiled a headline-grabbing plan, only to have it blocked by a federal judge shortly after the midterm elections. Ultimately, the Supreme Court struck it down in June 2023. Despite repeatedly claiming that there was no Plan B, the Biden administration swiftly announced future moves following the legal setback.
One of the most significant initiatives is the Saving on a Valuable Education (SAVE) plan, which aims to greatly reduce the repayment amount for most student loan borrowers. In fact, after a maximum of 20 years, most loans would be completely written off. However, critics argue that this plan benefits those with the least career success, raising concerns about its fairness.
“Want a free ride to college?” wrote Brookings Institution scholar Adam Looney. “You can have one, but only if you study cosmetology, liberal arts, or drama, preferably at a for-profit school.”
While the SAVE plan focuses on future borrowers, the Department of Education has introduced a new series of loan forgiveness initiatives for current borrowers. These initiatives target four groups: those with loan balances exceeding their original balance, those with loans older than 25 years, those burdened by unreasonable debt or insufficient earnings from their college experience, and those eligible for repayment plans but haven’t applied for them. A fifth group, addressing financial hardship not adequately addressed by the current system, may be added later.
“President Biden and I are committed to helping borrowers who’ve been failed by our country’s broken and unaffordable student loan system,” said Secretary of Education Miguel Cardona. “These draft proposals would build on the historic $127 billion in loan forgiveness the Biden-Harris Administration has already approved for nearly 3.6 million borrowers.”
It’s important to note that “forgiven” loans are not truly canceled but rather written off as a taxpayer expense, contributing to the national debt. The new plan is expected to have a smaller scale compared to the original, which would have impacted over 40 million people.
The current forgiveness plan operates under the authority of the Higher Education Act of 1965, requiring a lengthy negotiated rulemaking process. This process involves public comment and a 16-member committee consisting of students, college officials, loan servicers, state representatives, and advocates like the NAACP.
“Wiping out interest isn’t adequate,” emphasized committee member Yael Shavit. “We need to make sure we’re considering broad relief.”
Advocates closely monitor the rulemaking process, hoping for broad student debt cancellation. However, administration officials clarified that complete debt cancellation is not on the table, though partial cancellation may be considered in certain cases.
“President Biden promised broad student debt cancellation, and this is a chance for him to finally deliver on it,” wrote the Student Borrower Protection Center. “As [negotiated rulemaking] continues, we trust that those at the table who hold borrowers’ best interests at heart will shape a final student debt cancellation rule that helps all struggling borrowers.”
The rulemaking process allows for public comments, and critics like Neal McCluskey have taken advantage of this opportunity. Concerns include the potential for colleges to raise prices due to the promise of easy forgiveness, leading to false hope for incoming students. Critics argue that the underlying issue of rising college costs remains unaddressed.
A final rule is expected to be released early next year, subject to further public comments. Despite the intense debate surrounding student loans, data from the College Board suggests that the average size of federal loans per student has been decreasing since 2010. This indicates a growing awareness among voters and students about the trade-offs involved in pursuing higher education and taking on debt.
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How does President Biden plan to increase access to higher education and make college more affordable for low-income students?
65. However, the Biden administration is exploring options to use executive authority to expand loan forgiveness beyond the limitations set by current legislation. This has sparked a fierce debate among legal scholars and policymakers about the extent of the president’s power in this arena.
Another aspect of President Biden’s student loan plans is focused on increasing access to higher education. The administration intends to invest billions of dollars in expanding community colleges and historically black colleges and universities, as well as making college more affordable for low-income students. This includes expanding federal Pell Grants, increasing funding for work-study programs, and providing free community college for all students. These initiatives aim to address the rising cost of education and ensure that more Americans have the opportunity to pursue a college degree without incurring massive amounts of debt.
“We cannot allow the American dream of higher education to become a luxury only for the wealthy and well-connected,” said President Biden in a speech outlining his education agenda.
While President Biden’s student loan plans have garnered both praise and criticism, it is evident that they represent a complex and evolving landscape. As the administration continues to navigate legal challenges and refine its initiatives, it is essential for students, borrowers, and policymakers to stay informed and engaged in the ongoing conversation. The student loan crisis in America is a multifaceted issue that requires a comprehensive solution, and President Biden’s plans are a step in that direction.
As Neal McCluskey aptly stated, “Whether you love them or hate them, student loan reforms are very complicated and very important.” It is crucial for the public to stay informed and participate in the ongoing debate to ensure that any changes made to the student loan system are equitable, effective, and sustainable in the long run. The path to resolving the student loan crisis may be complex, but it is a journey that must be taken for the betterment of current and future generations of American students.
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